Key Financials in a Successful Business

A great product, smooth operations, and great people are important indicators of a successful company. However, if the business is firing on all cylinders, but financial tracking and reporting are lackluster, is the company truly prosperous? A former boss kept his business financial statements on the front of his padfolio. He referenced the financials regularly and his business decisions were based on maximizing sales, reducing expenses, managing cash inflow and outflow, and creating massive profit. Profit and cash flow management are crucial to every business’s success. If sales are record-breaking, but the cost of producing revenue diminishes margins, the business is not winning. If there is a windfall of revenue and new opportunities, but cash flow is not well managed, the business can run out of money before service delivery can even start. We are in business to make a profit. After the owner has done all they can to produce sales, reduce expenses, and manage cash, net income must flow to the bottom line. Here are a handful of key financial indicators that lead to a healthy business: Profit and Loss – Best practices suggest that every business owner should keep a log of all income and expenses, either...